NO2 and biofuels

A couple of months ago I predicted:

Biofuels (of the sort they're mandating that we use now) will turn out to be worse for the environment, and more expensive, than oil/gas/coal, once all of the hidden costs are accounted for.

A few days ago the British Royal Society released a report that says we don't really know whether or not biofuels are a good idea or not.

I'd started this blog posting as a "nyah-nyah, told ya so" -- another blog I read had cherry-picked a couple of facts from the report to bash biofuels (like the fact that nobody's sure whether or not fertilizing the crops used to make biofuels releases enough nitrous oxide into the atmosphere to cause more global warming than would be caused by just burning coal or oil and releasing CO2; nitrous oxide is a much more powerful greenhouse gas than CO2...)

But then I actually tracked down and read the report, and it basically says that policy makers screwed up by requiring that a certain amount of biofuels be used by a certain date. Like here in Massachusetts, where Thou Shalt Use 10% Ethanol In Thine Gasoline (it's a state law, if I recall correctly). You'd think maybe they'd learned their lesson with the MTBE fiasco.

The problem is that if you just mandate a requirement like "X% of your gasoline must be biofuels" then the biofuel manufacturers have absolutely no incentive to make their biofuels environmentally friendly. There's no incentive to do research and development into biofuels that don't require lots of nitrogen fertilizer, not to mention no opportunity to weigh the environmental costs of biofuels versus other energy technologies.

It would be much better policy to simply tax or cap all greenhouse gas emissions (CO2, NO2, and any others that have a significant effect), tax or cap any other pollution produced by the various energy technologies, and then let the Market do what it's good at-- innovate to lower costs and compete to provide the highest-quality, lowest cost product.

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Update: The ICSU thinks biofuels are bad, too.